Are ‘Putin’s Billions’ a Myth?

Russian President Vladimir Putin speaks during a ceremony to present military officers and prosecutors appointed to senior command posts and promoted to higher military titles and ranks at the Alexander Hall in the Grand Kremlin Palace in Moscow, Russia, April 11, 2019. EPA-E

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Are ‘Putin’s Billions’ a Myth?

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Ivan Danilov

RIA Novosti columnist

“Despite Aslund's (and many of his colleagues') rock-solid belief that there must be the mythical ‘Putin’s billions’ in the West, American (and not only American) intelligence agencies, which have full access to all financial transactions in the U.S., UK, the European Union and offshore jurisdictions in the Western world, could not find anything."

[Editor’s Note, Correction and Update: In an earlier version of this article, Polygraph.info identified Dr. Mark Galeotti as an American security expert, which Galeotti says is erroneous. This story also is updated with additional information and reaction from the Gunvor Group, as well as a note that we sought additional information from Aslund].

In an op-ed published on May 10 titled “Putin’s Invisible Billions are Once Again Calculated in the U.S.A.,” RIA Novosti columnist Ivan Danilov lashed out at the efforts of Western analysts to determine the scope of President Vladimir Putin’s alleged fortune.

Danilov targeted an assessment quoted by Newsweek magazine this past February, made by Anders Aslund, a Swedish economist and resident senior fellow at the Atlantic Council in Washington, D.C., who served as an adviser to the governments of Russia and Ukraine in the 1990s.

"You can see the Russian state transactions and the money leaving the country. Capital flight is around $800 billion, and one-sixth probably belongs to Putin and one-sixth for his friends," Aslund told Newsweek. "I would estimate that Putin is worth around $100-160 billion. We can see that Putin and his friends have taken $10-15 billion from Gazprom every year since 2004. That’s just Gazprom. There are large numbers of transactions being made."

Aslund added: "What’s much more difficult is to see where the money goes. It’s typically Cyprus, Cayman Islands, British Virgin Islands and Wilmington, Delaware. The U.S. needs legislation against anonymous companies. The ultimate beneficiaries should be published.”

In his commentary, Danilov compared the quality of Aslund’s assessment to that of an “anonymous troll,” claiming that rather than dealing in real analysis, the Swedish economist is “engaged in propaganda based on personal projection.”

“It seems as if the ‘Atlantic Council’ expert built his logical structure on the basis of what he would have done had he come to power: rob the country, take the loot offshore, leave half for himself and feel like the bee’s knees, even if one cannot use the received money,” Danilov wrote.

He added that despite having access to all the financial transactions in the West and their respective territories, neither American intelligence agencies nor their peers were able to find Putin’s “mythical” wealth.

In that book, “Russia’s Crony Capitalism: The Path from Market Economy to Kleptocracy,” Aslund explains in more detail how he arrived at his estimate of Putin’s wealth:

“My assessment is that since Putin’s circle got its looting fully organized around 2006, they have extracted $15-25 billion a year, reaching a total of $195-325 billion, a large share of the Russian private offshore wealth. Presuming that half of this wealth belongs to Putin, his net wealth would amount to $100-160 billion. Naturally, Putin and his cronies cannot enjoy their wealth. It is all about power. If they are not the wealthiest, they fear they will lose power.”

Polygraph.info asked Aslund to provide more details concerning the money transferred abroad by Putin and his “friends,” including specifics regarding the “large numbers of transactions” he referred to in his Newsweek interview. At the time of publication, he had not responded.

Despite Danilov’s claims, Aslund says it is remarkable that RIA Novosti opted to publish his argument and figures at all.

“Presumably that means that they are so widely cited that RIA thinks that it has to deal with them. Normally official Russian media just ignore me. This is a very good sign,” he said. “My conclusion is that we need to continue hammer on so that the official propagandists, such as Danilov, next find it necessary to go into real arguments. Thus, this might represent a small step forward.”

The subject of Putin’s wealth has long been a matter of speculation in both the West and Russia.

This past February, U.S. Senator Lindsey Graham introduced the Defending American Security from Kremlin Aggression Act of 2019. Among other things, it calls on the Director of U.S. National Intelligence to submit “a detailed report on the personal net worth and assets” of Russian President Vladimir Putin. That U.S. intelligence report is pending.

Putin’s press secretary Dmitry Peskov characterized the U.S. congressional efforts to determine Putin’s wealth as a manifestation of “Russophobia.”

While Danilov claimed in his commentary that the U.S. and other Western intelligence agencies were unable to find what he characterized as Putin’s “mythical billions,” the New York Times reported in 2014 that the U.S. Central Intelligence Agency had in fact looked into Putin’s wealth. According to the newspaper, the CIA conducted a secret (and unreleased) assessment in 2007 that estimated the Russian leader’s wealth at $40 billion.

That mirrored a 2007 assessment by Russian political expert Stanislav Belkovsky, who likewise estimated Putin’s wealth at $40 billion. Belkovsky claimed the Russian president "effectively" controlled 37% of the shares of Surgutneftegaz, an oil exploration company and Russia's third biggest oil producer, which at the time was worth $20 billion, as well as 4.5% of Russia’s natural gas monopoly Gazprom and "at least 75%" of Gunvor, a Swiss-based oil trading company founded by billionaire Putin-confidant Gennady Timchenko.

Russia -- Russian tycoon Gennady Timchenko attends a meeting of Russian President Vladimir Putin with members of the presidential council for physical culture and sports in the southern city of Krasnodar, Russia, May 23, 2017.

In 2008, a U.S. diplomatic cable released by WikiLeaks similarly alleged that Gunvor “is rumored to be one of Putin's sources of undisclosed wealth,” noting that opposition leader Alexei Navalny had “sued Gunvor and several Russian oil companies for information regarding their oil trading practices” and estimating “that Gunvor may control up to 50% of total Russian oil exports.”

In 2016, Adam Szubin, who was then the U.S. Acting Under Secretary for Terrorism and Financial Crimes, told the BBC the U.S. government had evidence linking Putin’s wealth to Timchenko’s activities.

“To be clear, President Putin has never had any interest in, investment in, or involvement with Gunvor Group either directly or indirectly,” Seth Thomas Pietras, the Corporate Affairs Director of Gunvor Group, said in an e-mail to Polygraph.info. “Mr. Belkovsky's claims are based on absolutely nothing and are fundamentally ridiculous. And the U.S. government, despite its statement has never sanctioned Gunvor in any capacity, nor has it provided any evidence of its own.”

In March 2014, Reuters reported Timochenko, identified as a co-owner of Gunvor, faced U.S. sanctions. Concern that Gunvor could be caught in those sanctions “dissipated” by evening when it was reported that co-founder Torbjorn Tornqvist said Timochenko had sold his 44 percent stake in the firm.

Pietras said Gunvor does business in the U.S. to this day.

As previously reported by Polygraph.info, the opaque nature of the alleged schemes used to mask Putin’s wealth has led to widely varying estimates over the years.

In 2012, Belkovsky revised his estimate of Putin’s wealth to $60-70 billion.

Also in 2012, Leonid Martynyuk and the late opposition leader Boris Nemtsovreleased a report titled “Life of a galley slave (palaces, yachts, cars, planes and other accessories),” which claimed Putin had 20 palaces and villas, including “Putin’s Palace,” a Black Sea property worth $1 billion dollars that was allegedly built through a convoluted cash flow scheme.

This chart shows the scheme of interactions between companies and cash flows involved in financing the construction of "Putin's Palace". Source: Sergei Kolesnikov via wikipedia.org.

They also alleged that Putin owned some 43 aircraft, various yachts (including a $35 million vessel allegedly transferred to Putin via the Russian oligarch Roman Abramovich) and an extensive watch collection.

In 2016, documents leaked from Mossack Fonseca & Co., a Panamanian law firm and corporate service provider, which became known as the Panama Papers, included personal financial information about public officials worldwide, including several close to Putin.

The Panama Papers revealed that Sergei Roldugin, a cellist, lifelong friend and godfather to Putin’s eldest daughter, Maria, had helped moved billions of dollars through a series of shell companies.

In the run-up to the Russian presidential election last year, Russia’s Central Election Commission released information on Putin’s personal assets and income, stating that he earned an average of $112,000 a year between 2011 and 2016, totaling approximately $673,000, the Washington Post reported

Putin listed 13 bank accounts with a combined balance of $241,000, an 800-square-foot apartment in St. Petersburg, 230 shares in Bank Saint Petersburg and three automobiles.

RUSSIA - Russian President Vladimir Putin and Belarus President Alexander Lukashenko talk after skiing at the Gazprom Mountain Resort (Laura) in Sochi, Russia February 13, 2019

Reports of such relatively modest holdings have been ridiculed by the Russian president’s critics, with Boris Nemtsov noting in 2012 that Putin would not have been able to “eat or drink for six years” to have acquired his (then) $700,000 watch collection.

An expert on Russian politics and security, Mark Galeotti, has said that, given the way Putin’s alleged holdings are managed, “specific assertions regarding Putin’s alleged riches rest on rather shakier evidentiary grounds.”

Belkovsky, when he assessed Putin’s wealth at $40 billion in 2007, said that the Russian president’s name does not appear on any shareholders' register, given that there “is a non-transparent scheme of successive ownership of offshore companies and funds.”

The late Karen Dawisha, in her book “Putin’s Kleptocracy,”said that the proxy system through which Putin’s alleged wealth is distributed means that he, like many of Russia’s oligarchs, has access to wealth rather than ownership of it.

RUSSIA -- Russian President Vladimir Putin attends a meeting with German businessmen at the Kremlin in Moscow, November 1, 2018

Critics and investigative journalists have made a strong case that Putin’s holdings far outweigh his declared assets.

There is uncertainty on the precise sum of Putin's wealth, and the assessment by the Director of U.S. National Intelligence apparently is not yet complete. However, with the pile of evidence and documents in the Panama Papers and in the hands of independent investigators such as those cited by Dawisha, Polygraph.info finds that Danilov’s claim that Western intelligence agencies have not been able to find evidence of Putin’s wealth to be misleading.